Withdrawal from Provident Fund (PF) Account before Completion of Five years taxable?

Withdrawal of Provident Fund may attract Income Tax. The Income Tax Department recently told EPFO (Employees Provident Fund Organisation) to deduct Tax (TDS) from the withdrawal amount, if the withdrawal happened before completing five years of subscription. Tax officials have cited a rule in the 1961 Income-Tax Act that taxes PF withdrawals by employees before completing five years of contributions into the EPF is taxable.

In most cases, the accumulated PF balance is withdrawn at the time of retirement, and therefore, not taxable in the hands of the individual. However, in certain cases like change in employment, an individual may even withdraw the PF balance earlier. The point one needs to remember is that the amount received from such PF is not exempt from tax in all cases. Only under the circumstances listed below will the amount withdrawn from PF be eligible for such exemption from tax.

If the employee has rendered continuous service with the employer for five years or more. Again, if the balance includes amount transferred from the individual’s PF account maintained by previous employer(s), then the years of continuous service rendered to the former employer(s) would be included for the purpose of computing the five-year period.

If the employee has not rendered continuous service of five years, but the service is terminated by reason of the employee’s ill health or discontinuance of the employer’s business or reasons beyond the control of the employee, the amount will be tax-exempt.

Another tax-exempt case is when, on the cessation of the employment, the employee finds another job and the the accumulated PF balance is transferred to his individual PF account maintained by the new employer.

In short, where the PF amount is withdrawn before five years of continuous service, it may be taxable in the hands of the individual as if the fund was not recognised from the start of the contributions. In such a case, payment received by the individual in respect of the employer’s contribution along with the interest accrual thereon is taxed as “salary”. Interest on the employee’s contribution is taxable as “other income”. Payment received in respect of the employee’s own contribution is exempt from tax (to the extent not claimed as a deduction earlier).

I-T provisions provide that the trustees of a recognised PF or any person authorised by the regulations of the fund to make the payment of the accumulated balance to the employee should deduct tax at source while paying the amount. Further, the person liable to deduct tax has to issue the certificate of tax deducted at source (Form 16) within the specified time frame to the employee depicting the details of taxes withheld from the accumulated PF balance and also comply with other salary-related compliance necessities. So the next time you think of withdrawing your PF, you must as an individual also assess whether the same is taxable or exempt.

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I worked with a private company for four and years and nine months. I have given a provident fund (PF) withdrawal request to my ex-employer. Will the PF amount be taxable?

We understand that the PF maintained by your former employer was a recognized PF. As per the provisions in the Income-tax Act, if the employee has rendered continuous service with his employer for five years or more, then the withdrawal of accumulated balance from such PF is not taxable at the time of termination.

Since the period of your services with the ex-employer is four and a half years which is less than five years, you shall be liable to tax on the amount withdrawn from your PF. In addition to the normal tax payable by you, you will be required to pay all the tax concessions availed by you so far on account of contribution to such recognized PF. Further, the total employer’s contribution plus interest thereon, which was not taxed earlier, shall be taxable as profits in lieu of salary.

However, if the accumulated balance in your PF account is transferred to your recognized PF account maintained by the new employer, no tax liability shall arise due to such transfer.

90 Responses to “Withdrawal from Provident Fund before Completion of 5 years taxable?”

i have worked 29 dec 2009 to 26 march 2012 in a company and pf contribution from jan 2010 to apr 2012 and leave the job and join in other company on 12 apr 2012 and leave the job on 30 nov 2014. the pf contribuion for this company from may 2012 to dec 2014. Last company pf will be transfered in latest pf account.now i withdrowl my pf from PF departement.they donot deduct any tds from this pf amount .can u tell me that this PF amount will be taxable or not

I worked less than 5 years and now my current status is that i am a non resident indian , i just left my employer and am unemployed . I am withdrawing my providend fund from my previous employer but they want to deduct TDS due to tenure less than 5 years. However, i am in Canada and there is a tax treaty between india and Canada specially in case of non resident . Please advise under what clause of the income tax act can i point to them for no tax deduction. Also if tds is unavoidable can u p,s advise which slab i should be considered.

I was salary employed in IT company and worked for 3.5 yrs resigned and joined in another IT organization. I didn’t transferred my EPF to current organization still with old company and about to complete 5yrs. I would like to go for withdrwal my EPF, so is it taxable? How I can get avoid taxable?

Hi Sir,
I have resigned from my previous job after 9 years, 11 months, at that time i have submit my epf share, It was contratual job. Now I have joined new govt. job. Can i collect full amount of my account of that 9 year, 11months period.

Hello Team,
I have completed 6.5 yrs of service and now self employed. I have resigned in 2013. Wish to withdraw settle my EPFO account. I am located in pune where my epf is of KA.. I neex to clarify few doubts;
1. Do I fill only the form 19 and attest it from my previous employer or from designated official. Will I get full amount after settlement.
2. Waiting period is already over for me as I left job in 2013. But it is still way before my account gets inoperative.
3. Can I send the above form and cancelled cheque and what other doc to concerned office. Will it be fine to send via indian post registered AD.
4. How long will it take for refund..

I worked in privet company for 2 years 9 month. my pf amount was collect in pf trust of company. now i had withdraw my pf amount today but there is deduction of tds @ 20%. my question is how to get refund of this tds amount.

Hi,
I have worked in an organization for 3 years joined as a fresher and after that I joined new organization but neither i have transferred or withdraw my PF yet. Now I want to withdraw this previous PF( whish is a company’s PF Trust), as overall I have completed 5+ yrs but only 3 yrs with the previous company ,so would it still be taxable( since i have not continued 5 yrs with the same organisation though completed overall 5 yrs with 2 different organization)
Please respond.

Hi,
I have worked in an organization for 4 years and 4 months. I know as per rule if I withdraw my PF it will be taxable as I have not completed 5 years. However, if I withdraw after a year or so, would it still be taxable.

Sir,
I worked in a company for 7 years. After that I resigned that company and joined Govt. organisation on contract basis but on contract basis no P.f. deducted.
I have neither withdrawn nor transferred our P.f. amount till date.

Now i want to know can we deposit P.f amount regularly on existing P.f.account no.

I work in a private institution. My EPF account is more than seven years old. Recently I have withdrawn some amount from my EPF account for marriage of my brother. I want to know whether the amount is taxable or not?

I have worked in an organization for 4 years and 4 months. I know as per rule if I withdraw my PF it will be taxable as I have not completed 5 years. However, if I withdraw after a year or so, would it still be taxable.

Hi,
I have just left one company and joined another.
I served four and half years in previous company.
I want to withdraw my PF, please advise when I should do it.
Should i withdraw now or after completing 5 years, so that TDS is not deducted?

I am currently working and making voluntary contributions to my EPF accoount which I claim for tax exemption. Now if I leave my job before 5 years and do not take up any other job for some reason, say higher education, will the withdrawal I make be subject to tax deduction. Kindly reply as it as an urgent situation. Thanks,

Hi
I have resigned from my company and at the same time I owe the company leased car and have taken some of general purpose advance as well. Can I adjust PF I mean what ever I owe to company is the adjustment possible? Need advice on the same?

I worked with private BPO company for 37 months . My contribution to my pf account is 550 pm . After two months from my retirement from that company i have applied for my pf withdraw as i need money for my family member hospitalisation .

Once i have applied i recieved a email from my corporate team that as i didnt complete 5 years service they will deduct TDS from my pf amount . Because of my family suituation i confirm that still i have to withdraw my pf .

Once i confirm through my email i have recied only 5700 as my PF settlement . As per my knowledge 550*36= 19800 . I dont know how much they deducted as TDS . And also i dont know my employer have contributed for me or not .

Iam not satisfied with the amount which i recieved and still i didnt take even single paise from my bank account .

Can you please clarify me regarding TDS deduction .
And how can i came to know that my employer has been contributed for me or not .

Dear Sir
I worked for less than five years, but I have withdrawn the PF after 5 years of my service. My employer deducted tax at source showing Salary. Is it Correct? What shall I do? Can the tax be refunded back? Under which section will I claim exemption. Expecting a quick replay.
Thanks & Regards.

Is there a provision which exempts PF withdrawal from Tax if a person leave the employment before completion of 5 yrs but after that remains unemployed for a period of 1 year or more.

Also, what if someone does not complete 5 yrs of service with an employer but withdraws PF 5 years after the PF account was first opened? So someone completes say 3 years of service and then for the next 2 years he does not withdraw his PF and then after the five years are over then he withdraws the amount. What happens then? I think such withdrawal is taxable since the IT Act specifically mentions completion of 5 years of continuous service and it is of no relevance that the withdrawal was done from the account after 5 years from when the account was opened. Please clarify.

Hi…I have been working in various companies since Apr 2005. On every occassion of changing my job, I had got my PF transferred. I am now with HDFC Bank for the last 2 years. I have not gotten my earlier PF transferred to this organisation. I am now thinking of quitting my job and start something of my own. I will be resigning in the next one week.
Request you to please guide me with the following:

1. Should I withdraw the PF that is lying with my previous employer or should I get it transferred. I believe, transfer would take 2-3 months. I might have left HDFC by then.

2. In case I withdraw PF from my previous organisation, would TDS get deducted from it?

I worked in a private firm for nearly 2 years & firm had own private trust for PF.
I joined another company which did not have private PF trust.The company has deducted TDS from PF amount 3 months back ,I would appreciate if you pl suggest ,can I deposite the full amount of Previous PF & can TDS be refunded tom by the company or I.Tax deptt If I furnish full detail in my I.Tax return ?

Hello, I worked in India at an employer for 1 year 7 months during which I was paying into the Provident fund. I then moved overseas. I have been overseas for 6 years and now I have withdrawn my PF. The PF office has not deducted TDS. I would like to know if I need to pay any tax on my PF withdrawal for this year in which I have withdrawn, or is that that migration overseas is a reason for tax exemption?

I have resigned from my current job my date of joining is 07/08/2006 and my last date in the current company is 15/11/2013. I Want to with draw the amount.i was with the company for 7 years 03 months and 20 days .

I have left my previous company 1 year back but I have neither withdrawn nor transferred my PF a/c from previous to new employer. I wanted to know can I transfer my old PF a/c to the current one.
Pl. help.

I worked for a company for 5 years, now I re-located to another company in different city in India. Due to my personal situation I want to withdraw the money from my PF account when I talked to previous employer Finance departments they said that, there is Government rule that you can’t withdraw the amount as you are working in another organization inside India so you need to transfer your PF amount to current company organization PF account. This is what a reply I got from them and they are not processing my request. Is there is any rule like that(I don’t think so because my friends got their money). Please advise.

I worked for a company for 4 years (till March 2010), after which I left India. I am currently a non-resident for Indian tax purposes. I have now (in May 2013) withdrawn the monies accumulated in my ex-employer’s PF account and would like to know the taxation in my case i.e. should I not receive the employer’s contribution and interest on it (along with the enployee’s which is anyway tax exemmpt) without TDS, since I am no longer resident in India?

hi,
I have one query related to the PF.
I was worked in my past company for 3.6 yrs. now i have continue the same pf for present company . but here they are opened new PF account.
As per my knowledge , final pf amount is not taxable if you are continuing the 5 yrs.

My question is here , my previous company pf account is X and my present company is Y. I have plan to continue my present company for 1.6 yrs only.
then if I withdraw my PF amount , is it taxable or not ?

I have a query. I have worked in my organization for 30 months and now want to withdraw Pf as I will be leaving for higher studies.

So now the entire amount of PF will add to my taxable income of this financial year and if my total taxable income crosses 1.9 lac then only i’ll have to pay tax otherwise it should be tax free. Am I missing anything here?

Hi,
Please help to confirm if any employee left the organization in 3.5 /4 years of his/her services but withdrawal his/her PF after 5 years (from his Date of Joining in the organization) then the same will be taxable or non taxable.

I joined a company in 2007 and worked there for three years and then I moved to US. If I withdraw my PF now ( 2013) will I attract income tax, even though I have not completed five years of continous service.

I had worked with a certain company for 1.6 years(May 07- Nov 08), as of today the company is not operational, also I have not withdrawn/ transferred the PF from that account to any other account. Now I wish to
make an withdrawal, will I be able to withdraw the amount? If yes, i would like to know how? If no, i would request you to provide an alternate solution.

I have requested for PF withdrawal from my previous employer, but the Finance team of that company says PF cannot be withdrawn and only able to transfer when a person is employed. Is that true we cant withdraw our PF, if not can we able to take any legal action against the company?
I have my previous employer PF account number and i checked its still alive. Please let me know how to proceed further.

RE:”In your article in the second last paragraph you have mentioned that ” Payment received in respect of the employee’s own contribution is exempt from tax (to the extent not claimed as a deduction earlier)” My question is that if an employee had earlier claimed deduction in respect to own contribution to PF then under which Head of Income will it be taxed?”

I have completed 4 years 3 months with my present organisation and have been rendered redundant as of 1st April, 2013. As this leaving of organisation is beyond reasons of my control (employee’s control) will I be required to pay Income tax on the EPF amount if I choose to withdraw it during May 2013? I do not have any alternate employment.

Hi, kindly attend my below query:
I have 4 years 6 months in present company and previous company I worked for 3 years. I have been continuing the contribution of PF from previous company to present company, while leaving previous company I have opted to transfer the PF to new account maintained by present company. Now I have resigned and would be leaving by end of March 2013.
I have opted to transfer the Pf amount from previous company (worked for 3 years) to present company (worked for 4 years 6 months), will I be eligible for PF withdrawal and if so, will there be any tax implications.

I worked with a private company for three years(2007 to 2010). In my previous company PF-slip the DOJ mentioned as 01/10/2007. Now I am working with a new organasation since 2011 and I have given a provident fund (PF) withdrawal request to my ex-employer. Will the PF amount be taxable? As 05-years had already completed

I worked with a private company for three years(2007 to 2010). In my previous company pay-in-slip the DOJ mentioned in PF-slip as 01/10/2007. Now I am working with a new organasation since 2011 and I have given a provident fund (PF) withdrawal request to my ex-employer. Will the PF amount be taxable? As 05-years had already completed

Hi Sir,
I was working with an IT company any my EPS No starts with (TH/THA/EXEM/ xxxxx/xxxx)and total tenure was 4.7 years( as off jan 2013).As i understand i can withdraw pf after 2 months i.e on march as per PF rules.My question is now if i withdraw on march 2013- will it be taxable ? If yes shall i wait for June 2013 as to complete total 5 year although my last day in the company was jan 23rd 2013.So can i submit a withdrawn request on July 2013 so as there will no tax on the PF amount withdrawn.Please guide.

Hi Sir,
I was working with an IT company any my EPS No starts with (TH/THA/EXEM/ xxxxx/xxxx)and total tenure was 4.7 years( as off jan 2013).As i understand i can withdraw pf after 2 months i.e on march as per PF rules.My question is now if i withdraw on march 2013- will it be taxable ? If yes shall i wait for June 2013 as to complete total 5 year although my last day in the company was jan 23rd 2013.So can i submit a withdrawn request on July 2013 so as there will no tax on the PF amount withdrawn.Please guide.

I m currently working with axis bank since 4yrs this year is my 5th yr can i withdraw my PF i m not leaving my current organisation but i want to withdraw some amount is it possible, also if yes is the same taxable

I have a query. I was with 1 company from Jun 2003- Aug 2004. And was with another company from Aug 2004 – Aug 2009. When i am trying to check status of my earlier company online, its stating that “No record found and it has data only for past 6 months”. Can you please let me know how to know status of my earlier company PF?

I have resigned from my current job my date of joining is 17/03/2008 and my last date in the current company is 12/03/2013. ( my PF account was opened in 30/04/2008) almost i was with the company for 4 years 11 months and 20 days .

if i am withdrawing the PF after 12/03/2013. like to know whether it is taxable or not?

I have worked in a company for almost two years 2008-2010, where I was maintaining a PF. I then moved overseas for almost 2.7 years durning which time there were no PF contributions. Now I have resigned and going for my higher education. Can I withdraw my PF in 2013 ( when I complete 5 years after I started my PF), without attracting tax (TDS). (Even though I have maintained the PF for 2 years (

I worked for a multinational from Jan 2006 to May 2008 where my PF was deposited being in Trust. Thereafter, I joined another company from June 2008 to Jan 2012. At the time of joining, I filled up Form 13 to transfer my PF to my current account PF account and one year later I also got the confirmation that PF amount of last company is transferred to current PF account. After 10 months of leaving my second company I filled up Form 19 and Form 10C. A month later I got confirmation that my PF amount is credited to my account but EPS is rejected. When I approached to RPFC office they said EPS is my first company is not transferred, therefore, it is rejected. First I have to get my EPS transferred then only I can withdraw this.

They provide me one form to fill up and submit. On the form they have mentioned that if old account is with Trust then first Trust has to provide service information to RPFC. Then RPFC where first company (Trust ) deposited EPS will transfer to Second Account. Then again, I have to fill up 10C to withdraw the amount

I am completely fed up with this long process, I requested the officer in charge to just give me my current EPS amount as EPS of my last company was not significant, he refused and said you will get only whole amount else nothing.

Can anybody help me and also confirm if this is the only and correct process.

Hi
Please answer to my query, In case of PF amount withdrawl including the transferred PF amount from previous employer after total 5 years (including tenure at both previous and current employer), but these 5 years include 1 year GAP in between employement at Previous and current employer. In that condition will the withdrawl is TAX eligible.

One of my friend withdrawn PF and the previous company deducted overall TDS of Rs. 3 lacs. Can there be any possiblity to add the pf amount in currnet year income as other income and compute tax liability and claim refund from entire tds deducted from previous company?

I worked in a company for 3 years. After that I left that company and joined another company.Now i completed 3 years in the present company.
Can transfer the previous company PF to present company PF account.

(a) What is the minimum period or number of contributions required to get the benifit at the time of withdrawal from EPF. If someone is working in a establishment/company and cotributing towards EPF and resign from the company after a period of 05/06 months. Is he/she eligible to withdraw his/her contributed amount with other benifits? (b) What is the procedures to withdraw the amount from EFP in this case?and the same person is also working in another company.

(a) What is the minimum period or number of contributions required to get the benifit at the time of withdrawal from EPF. If someone is working in a establishment/company and cotributing towards EPF and resign from the company after a period of 03/04 months. Is he/she eligible to withdraw his/her contributed amount with other benifits? (b) What is the procedures to withdraw the amount from EFP in this case?

I have a query. I was working in a company that had their own PF. I resigned after 3 years. My new company is vary small and the salray does not include PF. Should I continue with my PF account in the old company? Will I get interest in it? Is leaving the PF amount safe? When can I withdraw the amount without any tax implication?

I was employed with a company for three years.( 1998 to 2001). The company had their PF Trust. I resigned from my job with the company. With the next company I was on contact and therefore no PF. I did not withdraw my PF accumulations. In 2010 I got retired from the job after completing my 60 years of age. Now I have requested my previous employer for withdrawl of my PF accumulations. Please advise if the PF withdrawl will be taxable now , if yes then to what extent.

Can I withdraw my supperannuation fund (SAF) balance pre-maturaly? I am in service for 10 years, switching over job. The new company does not have SAF. The company may deduct tax at the applicable rate but whether it is permissible?

I have resigned from State bank after a service period of 18 months. Now am I be able to claim refund of my Pension and provident fund accumulated amount? What shall be the procedure of claiming the fund? What will be the remedy if the employer/Bank delays the refund? Am I be able to lodge complain aginst them.

I wish to know two things regarding P.F. liability.1) Do I need to deduct PF if I pay my parmanent Labour a wages of Rs.250 perday i.e. 7500/month? 2) Do Welfare cess @1% deducted in contract work can be adjusted with PF Liability?.

When i was with my previous employer I have contributed in EPF for about 4 years and left the service in july 2009 & now with a different employer who is having its own trust. If i will withdraw my EPF & EPS from the previous employer,
will it be taxable?
If taxable what will be the percentage?

I had left my previous organization 10th January 2011. Now I would like to apply for my PF withdrawl, May I know what will be the procedure. I had heard that need some extra documentation for withdrawl of PF after 1 year of leaving the service,

Pls guide me as per that I can apply for my PF withdrawl of PF amount.

I withdrew my PF after resignation from my previous company. The company did not have a PF trust and accounts were maintained at the PF office bandra, mumbai. The amount has been deposited in my account.
However, I do not know if taxes have been deducted at source or I have to show the amount received while filing returns.

I have recently withdrew my PF after resignation from the company. Is the money deposited by EPFO to my account is after deducting the taxes. I was reading that IT department has asked EPFO to deduct taxes on premature withdrawal.

i want to understand the above mentioned Imcome tax implication on withdrawal of PF amount with in five years. want to understand two points. (1). As per India Income tax act 1961, Under which section, rules and Notification this has been indicated. (2). if so is this will be prospective effect OR retraspective effect, in this case is their any time line which clarifies how many years back data they can verify as per Income tax law. appreciate if any body try to clarify me.

I have a query. I was a member of a recognised Provident Fund trust for over 20 years. On resignation, I joined a new company,in1998, where I became a member of The Employees Provident Fund Scheme 1952 (funds from Recognised PF trust were transferred by the ealier company into this account). I also became a member of an optional Provident Fund scheme run by the company for its employees. I resigned from the second company, in 2002, after working for 4 years. Will the balance (it has not been withdrawn to date) lying in the optional PF scheme be liable to deduction of tax at source since I did not complete 5 years service in the new company even though I have continuously been a member of aPF trust for over 24 years.

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Very nice article. In your article in the second last paragraph you have mentioned that ” Payment received in respect of the employee’s own contribution is exempt from tax (to the extent not claimed as a deduction earlier)” My question is that if an employee had earlier claimed deduction in respect to own contribution to PF then under which Head of Income will it be taxed?